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Auditor seeks access to biz tax returns

By Katie Lannan, klannan@lowellsun.com

Updated:
11/19/2013 06:43:02 AM EST

LOWELL -- State Auditor Suzanne Bump is requesting the power to access currently confidential corporate tax returns, records she said would allow her office to determine whether tax incentives given out by the state are an efficient and effective use of government resources.

"We have to look at business tax returns to see if the Department of Revenue is actually auditing according to how they say they are," Bump said. "We wanted to be able to say, 'Is what you're doing good enough? Are you missing areas where there could be potential for fraud, or is this actually benefiting us? Is this actually benefiting the group of businesses or the people that you want to see employed? What is the impact of it?'"

During a meeting with the editorial board of The Sun in Lowell on Monday, Bump said that of the 41 states that require the filing of tax returns, 36 specifically authorize the state auditor to review them.

She filed legislation requesting that authority earlier this year, more than two years after an audit of business-related tax credits and other expenditures found little oversight, accountability or transparency.

Bump said her office then set out to audit the administration of tax-incentive programs but could not do so without being able to analyze and confirm the data contained in businesses' tax returns.

While the state budget is scrutinized by "thousands of eyes" each year, many tax credits are "never looked at again," though tax policy and the budget have equal impact on government revenue, Bump said.

Though Bump said her proposal would allow for greater oversight and accountability, some business leaders have blasted it as an overreach.

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Earlier this year, business groups Associated Industries of Massachusetts, the Greater Boston Chamber of Commerce, the Massachusetts Business Roundtable and the Massachusetts Taxpayers Foundation wrote to the state Legislature, expressing strong objection to Bump's proposal, arguing in part that it's a violation of privacy that would have a chilling effect on the local business community.

Tax returns contain proprietary information that could be improperly used, they contended.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, said Monday that Bump's plan to measure the effectiveness of tax credits would go "well beyond the current role of the auditor."

In an April letter responding to the business groups, Bump called her request "a very narrow statutory change."

She said Monday that the data would allow her to do what is essentially normal audit work -- asking about the Department of Revenue's practices and whether tax credits are accomplishing their intended goal and reaching their intended recipient.

Bump compared the need to access the data contained in returns to the need to access records on welfare recipients for an audit, released in May, that uncovered more than $2 million in fraudulent spending by the Department of Transitional Assistance.

"We would not be broadcasting the names of the business or otherwise personal information," Bump said. "If there ever was something, on its face, really egregious, we would go up to the attorney general with it, but not to the public or the press."

Her department would not audit the businesses themselves or be able to request more information from the businesses, she said.

Bump said she consulted with the Department of Revenue in drafting her proposal, and said officials there had no opposition.

She described her idea as one that everyone can agree to, despite objections raised by the business groups.

"There's a justifiable, understandable concern about a negative business impact, but I think this is actually a positive for businesses," Bump said. "If we can move towards a tax code that is fairer in its inception and is also appropriately administered, I think that's a win for the business community. I don't know why you would say we just want it in a black box and never revisited."

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